EURGBP Bears Testing Trend Line/Channel Support – 0.8000 Level
- The EURGBP currency pair has taken out last weeks low at 0.7995 and is moving under the ascending trend line support level. This trend line began in July at the 0.7755 area. The euro is now trading at a one-month low against the British pound. See attached daily timeframe EURGBP chart.
- A break of this trend line support also marks a move under 0.8000, this gives two significant technical levels in close proximity. A close under this level on the higher timeframe charts, and subsequent bearish follow through, would be a constructive technical development for the euro/sterling pair.
- Nonetheless, despite the breakout on the intra-day basis these kind of confluence levels can often hold as support over following trading sessions.
- Even as recently as the 26/10/12 the 0.8000 level held as support, when price moved as low as 0.8001 and then up to the 0.8075 level prior to resuming the downtrend.
- If the current downside momentum carries through into the early week trading, we could see the following levels come into focus: The 50% retrace of the 0.7755 > 0.8164 swing higher is located around 0.7963, further to this is the 61.8% retrace of the same swing which is aligned with the FE100 of 0.8164 - 0.8001 - 0.8075 and previous support low, giving a near 10 pip potential support range situated around the 0.7910 – 20 area.
- If the breakout does not see the required bearish momentum the 0.8000 area, and previous trend line support, is the key potential near term resistance. Further to this is the prior swing high around 0.8075.
- Price action on the GBPUSD around the 1.6000 handle and EURUSD at the previous 1.2830 area range lows is also going to help determine the near term EURGBP directional bias. We note that the euro is trading at a two-month low versus the U.S. dollar.
Related terms: Forex analysis, euro to pound, euro cross, technical analysis, cable, breakout trading, support and resistance.